IRS developing Form 8300 outreach for dealers

KayDel Marshall, an Internal Revenue Service official in Portland, Ore., said he discovered at a September speech that auto dealers unnecessarily file IRS Form 8300 on many transactions.

"They were doing 8300s on everything over $10,000," he said. "I told them how the banks took care of most of that with the FinCEN form, so they were delighted to hear they have to do less paperwork."

Marshall said most of the Portland dealers’ uncertainties involved "relationships." The CATA is working with the IRS in Chicago to develop a Form 8300 outreach to help dealers with how—and when—to complete the form.

Marshall recounted four prominent questions during his speech.

Q: "Dad comes in the morning and buys a car for $9,000 with a cashier’s check, and says he is sending his son in that afternoon to buy a used car for school. Dad wants to find his son a vehicle for less than $3,000. His son pays $2,500 using savings from his after-school job. In whose name do you put the Form 8300?"

A: "I am assuming that the son is a minor and both cars will be titled to Dad. By definition, the two transactions occurred within a 24-hour period and therefore would be treated as one transaction for Form 8300 filing purposes.

"If there is a Form 8300 filing requirement, the name on the form would be Dad’s. You noticed I said ‘if.’ The definition of cash is expanded to include monetary instruments when you have a designated reporting transaction. Included in the definition of a designated reporting transaction is the retail sale of a consumer durable.

"A ‘consumer durable’ is defined as an item of tangible personal property that is suitable under ordinary use for personal consumption or use, that can reasonably be expected to be useful for at least one year, and that has a sales price of more than $10,000. There is no provision in the regulations that allows for the grouping of two or more consumer durables for the purpose of the $10,000 threshold.

"Therefore, even though we treat both sales as a related transaction, since neither vehicle has a sales price of more than $10,000, we are not expanding the definition of cash. As a result, since only $3,000 in cash was received, there is no Form 8300 filing requirement."

Q: "The same question, with husband and wife each buying a car that pushes them over the $10,000 and requires a Form 8300. OK, you can do one 8300, but, in whose name do you put it?"

A: "The Form 8300 instruction is clear on this point. If two or more individuals conducted the transactions you are reporting, check the box and complete Part I for any one of the individuals. Provide the same information on the back of the form. If more than three individuals are involved, provide the same information on additional sheets of paper and attach them to this form."

Q: "If a guy comes in with a book of traveler’s checks issued by the same source bank in denominations of $1,000 each, and he signs 11 of them to buy a car, would this be something the bank would have taken care of when he bought the travelers checks, or would the dealer need to do a Form 8300?"

A: "If the traveler’s checks were purchased at the same time with cash, the financial institution issuing the checks would have been required to file a Currency Transaction Report. Nevertheless, since the traveler’s checks used in the transaction have a face value of less than $10,000, and since we are dealing with a retail sale of a consumer durable, the business would be required to treat these monetary entrustments as cash and file a Form 8300."

Q: "One of my questions was about a guy from Hong Kong who came in and bought a car for $30,000.He had one cashier’s check for $15,000 (which the bank would have taken care of), and two more cashier’s checks for $7,500 each.

"The dealer would not have been required to file on the first one, but the other two would have set up a filing requirement, right? We didn’t file an 8300 on the second two and it has been over two months. Are we looking at a penalty situation?"

A: "The business can be assessed a penalty for failure to file. However, if you file the form and attach a statement to the delinquent Form 8300 explaining the circumstances, most likely no penalty will be assessed.

"The purpose of our AML laws is to create a paper trail that law enforcement can use to identify the bad guys attempting to launder money or perpetrate other financial crimes.

"We are not trying to balance the budget on the backs of the small business owners. But file the delinquent today."